"This is a once-in-a-lifetime opportunity," Schiff says. "People are going to feel like complete morons if they don't participate. The people getting punished are the ones who never made an irresponsible decision to buy a house they couldn't afford."
The government is offering loan servicers $800 for every homeowner they get into the plan.
Schiff predicts that loan agents "will be cold-calling people trying to get them into it. Just like they encouraged people to overstate their income to get a bigger loan in the first place, now they will encourage them to understate their income to qualify for a smaller loan."'
* It makes you wanna cry* That or -self censor-.
There was no overstatement of income required when I bought my house. They just qualified me for far more than I could ever have paid. I knocked it down by about 33%.
I agree with Schiff. Whether you hate it or not, it makes little economic sense to keep paying on your mortgage when you are $200K upside down. Hence, that is why servicers have to be more aggressive in terms of lowering principal mods.
American Airlines and other companies restructure their debt to avoid bankruptcy. They are hailed for making attempts at avoiding bankruptcy. But if a homeowner tries to restructure their debt, Freepers and others make them seem like pedophiles. Why the different standards? THE BANKS KNEW OF THIS POSSIBILILTY, YET MANY REFUSE TO RESTRUCTURE EVEN IF IT LOWERS COSTS TO THEM! Why? Litigation, pure and simple. A confession that they knew that things could collapse.
Yes, bad people are “let off the hook.” But if we don’t do something, then we are in for a nightmare going forward.